Advanced Corporate Reporting: Consolidated Financial Statements, Fair Value Accounting, IFRS9, Financial Statements for Investors, Treatment of Building Held for Sale

ADVANCED CORPORATE
REPORTING

Table of Contents
Question: 1.......................................................................................................................................3
Question 4........................................................................................................................................4
a) Advantage and disadvantage of fair value accounting............................................................4
b) Effect of transaction as per IFRS9...........................................................................................5
c)..................................................................................................................................................5
Question 5........................................................................................................................................6
a) Uses of financial statements for equity investors and debt-investors......................................6
c)..................................................................................................................................................6
i) Difference between historical cost and value in use................................................................6
ii) Treatment of building held for sale transaction as per IFRS5.................................................7
REFERENCES................................................................................................................................1

Question: 1
Consolidated statement of financial position
Particulars Amount
Assets
Non – current assets
Property Plant and equipment [718750 + (350000 + 35000 – 7000)] 1096750
Goodwill 72900
Current Assets
Inventories [84000 + 52360 – 3600] 132760
Trade receivables [56250 + 38500] 94750
Cash and cash equivalents [11800 + 9940] 21740
Total assets 1418900
Equity and liabilities
Ordinary shares 625000
Retained earnings 127910
Non – controlling interest 128810
Long term liabilities 192500 + 11200 203700
Current liabilities
Trade payables 64300 + 49280 113580
Other current liabilities 207400 + 16520 223920
Total equity and liabilities 1418900
Working Notes:
1. Calculation of net assets of Court Plc. on the date of reporting
Particulars At acquisition on 1st
April 2019
On reporting date as
at 31st March 2021
Post – acquisition
Equity Shares 280000 280000 -
Retained earnings 31500 71400 39900
Building: Fair value
adjustment (less
Depriciation)
35000 35000 – 3500 * 2
(35000/10) = 28000
(7000)
Fair value of the net
assets
346500 379400 32900
2. Calculation of Goodwill
Goodwill = Consideration provided by Tennis Plc. + Fair value of Non – controlling interest at
acquisition – net assets at acquisition of Court Plc. = 310000 + 116000 – 346500 = 79500.
Goodwill to be shown in consolidated financial statement as at 31st March 2021 = 79500 – 6600
= 72900.
3. Calculation of Non – controlling interest